Understanding why older Americans switch Medicare Advantage plans

More than half of older Americans now get their Medicare coverage through an insurance company's Medicare Advantage plan. But many go on to switch plans or even leave for traditional Medicare when Open Enrollment comes around each autumn.

Researchers have had a hard time getting access to data that could help them understand what drives these changes, which have major implications for federal spending on Medicare as well as individuals' health.

Now, a new study in the June issue of Health Affairs peels back the curtain on what motivates people to switch MA plans or leave MA altogether.

The inability to access the care they needed, and dissatisfaction with the quality of the care they received, had much more to do with switching to another MA plan than the costs they had to pay, the study finds.

But access issues were much more likely to drive someone out of MA completely and back to traditional Medicare.

Dissatisfaction with access was much more common among people who say their health is poor - a group that other studies have shown to have the highest rates of MA plan switching and exits.

Geoffrey Hoffman, Ph.D., the lead author of the new study and an associate professor in the U-M School of Nursing, says the study also shows that people who enrolled in an MA plan with a low star rating – which they may or may not have been aware of unless they checked Medicare's Plan Finder – were also more likely to switch.

The idea of the private market for Medicare Advantage plans is that people are supposed to shop around as their needs evolve, but with medical care you likely need to experience it before you know whether you want to switch. We show that people who stay in MA are shopping for better service, but that those who switch to traditional Medicare are the ones potentially with high health care needs, who are much more strongly driven by dissatisfaction with access to care issues in MA."

Geoffrey Hoffman, Ph.D., Associate Professor, U-M School of Nursing

The new findings about people in poor health leaving for traditional Medicare confirm research by others, but in a patient-centered way instead of one based on billing. That's because Hoffman and his colleagues used anonymous data about satisfaction with medical care access, cost, and quality from surveys that Medicare beneficiaries take each year, and linked it to anonymous data about MA enrollment.

The new study also suggests that the star ratings system, which assigns one to five stars to each MA plan based on a combination of data including participant surveys, can be a good guide to help people choose a plan.

"While imperfect, the star rating a plan receives is still signaling something important, that our study tells us is definitely linked to why people are switching," Hoffman said.

But he also notes that plan generosity – a measure that people picking Medicare options don't have easy access to – also predicted switching behavior, with people in more-generous plans less likely to switch.

Dissatisfied customers

The new study shows that those who left their MA plan for any other form of Medicare were much more likely than those who stayed with their plan to say they had had trouble getting care they needed, and were dissatisfied with the cost of their care and the quality of their care.

Those who said their health is poor were more than twice as likely as other MA enrollees to say they had trouble getting care they needed, more than three times as likely to be dissatisfied with the quality of their care, and more than twice as likely to be dissatisfied with the cost of their care and with their specialty care. About 15% of the study sample reported being in poor health.

But overall, dissatisfaction with cost wasn't associated with leaving a MA plan. Access to care and quality of care were – as were enrollment in a plan with a low star rating and low generosity of benefits.

Those who said they were having trouble accessing needed care were much more likely to switch from MA to traditional Medicare, which does not limit the selection of doctors and hospitals that enrollees can visit. Costs may be less of an issue in switching behavior given that, unlike traditional Medicare, MA plans have caps on enrollees' out-of-pocket costs.

The switching of people with high health needs to traditional Medicare has major implications for how the government handles payment to the insurance companies that run MA plans, as well as for the funding for traditional Medicare itself. When more costly beneficiaries leave MA, traditional Medicare is left with the expensive bill.

It also makes a difference for beneficiaries' out-of-pocket costs, since only some states allow people who leave MA to get unrestricted access to a Medigap plan that they can layer on top of traditional Medicare.

In other words, people who have major health issues and wanting to enroll in traditional Medicare after being in MA may not be able to qualify for Medigap coverage depending on what state they live in. This means those exiting MA for traditional Medicare may get stuck with more medical bills because they cannot get supplemental coverage to cover cost-sharing. Medigap plans are also products of private insurance companies.

The study used Medicare Current Beneficiary Survey data linked to anonymized information about the 3,600 people whose surveys they reviewed; the surveys had been taken after the individuals had been in their Medicare Advantage plan for at least 8 months. The researchers excluded data from some groups of older adults with special circumstances such as eligibility for Medicare for people with low incomes, and people enrolled in Medicare before age 65 because of disability or kidney failure.

The senior author of the paper is Deborah Levine, M.D., M.P.H., a professor in the U-M Medical School's Department of Internal Medicine in the Division of General Medicine. Other authors are Lianlian Lei, Ph.D., Ishrat Alam, Ph.D., Myra Kim, Sc.D., Lillian Min, M.D., MSHS, and Zhaohui Fan, M.D., MPH. Most of the authors are members of the U-M Institute for Healthcare Policy and Innovation.

The study was supported by the National Institute on Aging of the National Institutes of Health (R01AG074944).